Annual increases in pharmacy drug prices – the vast majority of which typically occur in January of each year – have not increased significantly this year (so far) compared to recent years, and experts say it doesn’t look like pharma is desperate yet to make up for what could be significant lost sales through government negotiations for some high-revenue drugs by 2026.
Analysts at 46Brooklyn released their latest 450+ increases available on list prices (not to be confused with the prices people pay out of pocket), as of January 1, finding that, like previous years, most increases remained at or below the industry mark of 10% and a median price increase of 5% so far in 2023.
Even still, companies are likely bracing for a slew of changes coming thanks to the Cut Inflation Act, which will force manufacturers to pay rebates on some Medicare drugs if their prices rise faster than the rate of inflation.
Former FDA commissioner Mark McClellan co-authored an article last month in Health Affairs with a Duke-Margolis colleague, warning that pharmaceutical manufacturers “will be more likely to continue to dramatically increase list prices (potentially with greater rebate growth) in commercial drug markets that have little Medicare usage, as their Medicare inflation penalties will be relatively small.
So what do we see so far? Pfizer raised prices on more than 50 of its drugs to start this year, including a 7.9% hike on its cancer drug Xalkori, which made $493 million in 2021.
Blockbuster Xeljanz, which made more than $2.4 billion in 2021 at Pfizer, also saw its price increase by 6% to start this year.
Breyanzi, Bristol Myers Squibb’s $400,000+ CAR-T therapy to treat lymphoma, will see a 9% price increase in 2023, which will be about $35,000 above list price current. Breyanzi made $87 million in sales in 2021.
GSK’s lupus drug Benlysta, which has a list price of more than $20,000 a year and made more than $1 billion in 2021, will see its list price increase by 7.7% in 2023, according to the 46Brooklyn database.
Antonio Ciaccia, president of 3 Axis Advisors who also manages Ohio-based 46Brooklyn, said Terminal News that their numbers don’t explain the whole history of drug prices, not only because they don’t look at list prices, but also because some companies haven’t yet reported to the database he accesses and publish.
On whether the impact of the IRA is evident with this latest round of increases, Ciaccia said: “I don’t see it yet.” While warning that it’s still early in the year, he added: “It’s not anything materially different from the last five years.” He noted that companies could return to more price increases later this year as well.
The percentage of overall one-year price increases separated by month shows that those in January increased to 32% of total price increases in 2011 compared to more than 60% in January for the previous five years. Ciaccia said companies may look to those more mid-year increases this year to try to reflect the rate of inflation.
Meanwhile, on the net price increase side, which is a more secret space, Adam Fein from Drug Channels highlighted how for 2022, according to SSR Health’s list and estimated net price figures:
the net prices of branded drugs have fallen for a fifth consecutive year. In addition, after adjusting for overall inflation, net branded drug prices fell nearly 9%. The factors behind the decline in drug prices will persist for years to come and will become even stronger due to the upcoming changes in Medicare and Medicaid. Employers, health plans and PBMs will determine whether patients will share in this ongoing deflation.